Concha y Toro's Premium Wine Strategy

Isabel Guilisasti, vice president of the Fine Wine division of Viña Concha y Toro, Family of Wineries explains how Chile's biggest wine company is premiumizing its wines.

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Meininger's: Concha y Toro is a huge business, with a broad range of brands, covering diverse market segments. Within the company, how do you separate super premium, premium and entry-level brands and products? (In other words, what are Invest and Principal)

Guilisasti: In 2017 Viña Concha y Toro, family of Wineries (production subsidiaries, origin Chile Viña Don Melchor, Viña Maipo, Concha y Toro and Viña Cono Sur; Argentina Viña Trivento, and California Fetzer Vineyards) made a complete review of its portfolio of brands from its three production origins (Chile, Argentina and California) developing a brand matrix according to relevance and growth potential in value and volume. In the Principal category, only the Casillero del Diablo brand and its different tiers are located in this category.

The other segment, called Invest, groups brands that have great potential for growth in value and volume, but still have some way to go to enter the category led by Casillero. Here we find brands that participate in different segments: Premium, Super Premium, Ultra Premium and Icono from the three origins: Diablo, Marques de Casa Concha and Don Melchor from Chile. From our Argentinean winery Trivento Reserve, from the United States Bonterra and 1000 Stories. Also from Chile, from our Cono Sur vineyard Cono Sur Orgánico.
 

Meininger's: What are the price point thresholds for each of these segments?

Guilisasti: From US$10 in the case of Casillero del Diablo.
 

Meininger's: From 2017-2021, Invest and Principal have increased their share of your sales from 40% to over 53% How did you make that happen over such a short period?

Guilisasti: Some concepts that summarize this premiumization path are decisions that accompany the strategy, reducing the number of brands, focusing the company's efforts around this brand matrix, focusing production and marketing efforts. But the most important thing is that the entire company is aligned with a single objective: the premiumization of Viña Concha y Toro. The strategy worked on how to add value from the vineyard origin to generate a positive impact in each bottle we deliver to our final consumers. The entire value chain and the different stakeholders were part of this new challenge. It has also been key to understand in depth what it means to focus our entire strategy on the end consumer as the central axis.
 

Meininger's: You’ve invested heavily in marketing over the years, ranging from sponsoring the Manchester United football team to sophisticated cinema and TV advertising. How important is this kind of activity to building sales of your premium wines?

Guilisasti: Indeed, there is a commitment to building brands over time, especially in Casillero del Diablo because it is our Principal brand. It is very important to invest in this type of campaigns as they generate greater awareness and loyalty among our global consumers.

1000 Stories Bourbon-Aged red is a very different wine to, say, Casillero del Diablo Merlot, Almaviva or a Bonterra organic rosé in a can. How much effort do you put into analysing which consumers are buying each of your products and brands?

Within the company's strategy we are always evaluating new opportunities to meet the demands and trends of our end consumer, under that criteria new brands are developed based on new winemaking projects and new packaging trends. The global market is very dynamic, and the wine industry has had to embrace this new demand, which forces us as an industry to make decisions around studies and data with greater efficiency, without neglecting innovation, sustainability and excellence.
 

Meininger's: And how big a part does digital marketing now play in your businesses.

Guilisasti: We are working to strengthen our digital marketing, understanding the relevance that this channel is acquiring. Our digital investment has grown both as a percentage of our investment as well as in absolute amounts. Undoubtedly, digital marketing has revolutionized and will continue to revolutionize the different industries. Brands are just a click away in your hands.
 

Meininger's: Chile has historically struggled to get higher prices. Do you think this is changing?

Guilisasti: Wines of Chile, as the industry's trade association, has been working hard to position Chile as a producer, and this, together with all the efforts made by all Chilean wineries in particular, has been consolidating this positioning.

As Viña Concha y Toro, our focus brands in our main markets have increased. Thus, 53% of the wine segment's revenues come from premium wines of the Principal and Invest brands.
 

Meininger's: The 10.6% and 16.7% volume and value growth in premium sales is a global figure. Which markets have generated the best growth in volume and, more specifically, value?

Guilisasti: In value terms, the highest growth rates in 2021 were observed in the UK (+10%), Chile (+25%), Brazil (+6.3%), Mexico (+16%) and China (+90%).
 

Meininger's: Over the long term, given the greater focus on the environment and healthy consumption of food and drink, do you think it is possible for the industry as a whole – rather than an individual company - to continue to grow both volume and value?

Guilisasti: In Viña Concha y Toro we have the deep conviction and our absolute commitment to build a sustainable model together with the promotion of moderate wine consumption. One of our greatest challenges is to educate through a training program on responsible wine consumption "Enjoy Responsibly from Start to Finish". It is in this context that we consider that wine in the history of humanity has been present around occasions of celebration and enjoyment.
 

Meininger's: How important is B Corp certification to CyT? How well understood is this kind of sustainable initiative by distributors and consumers?

Guilisasti: The company wanted to take this step of transparently and independently certifying its commitment to the different stakeholders and seeking to generate a positive economic, social and environmental impact, objectives in which the company has believed since before becoming a B company. At this stage, as a Certified B Company, the commitment becomes formal, institutional and public, because it is set out in its bylaws and its progress in this area is publicly available.

This movement was born in 2006 and is still in a stage of growth and globalization. More and more companies are seeking this recognition because it communicates sustainability as an integral concept of the company. As with any system that is consolidating, there are different degrees of maturity in its awarness depending on the markets, but its acceptance is growing day by day.
 

Meininger's: Finally, how far do you think premiumisation can go for CyT?

Guilisasti: We deeply believe in the premiunization of the company, it is the central pillar of our strategy, and we count on all our capabilities to achieve it. It is our great challenge as a company and we have no doubt that we will achieve it.

An ally in the premiumization strategy for the company is Viña Concha y Toro's Research and Development Center. This develops innovation based on science and technology to contribute to the excellence and sustainability of the holding's processes, as well as to transfer knowledge to the community. In other words, to incorporate more science in the agricultural, enological and plant functions that allow us to think about the vineyard of the future.

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